H-D Purchase of MV a Hot Topic

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Harley-Davidson's plan to purchase Italian motorcycle manufacturer MV Agusta Group for €70 million ($109 million) has been a hot topic at industry water coolers.

Will H-D set up a large network of dealers across the country with MV product? How does the Motor Company plan to integrate MV with the H-D and Buell brands? What will happen to Cagiva USA, the Willow Grove, Penn.-based importer and distributor of MV Agusta motorcycles?

So far the Motor Company's not saying. However, Harley-Davidson, Inc. CEO Jim Ziemer, in announcing the purchase plan July 11, said the acquisition is intended primarily to help expand Harley-Davidson, Inc.'s presence and footprint in Europe, complementing the Harley-Davidson and Buell motorcycle families.

Harley-Davidson has been seeking increased international sales to make up for a slowdown in the domestic market, and retail sales of Harley-Davidson motorcycles in Europe have grown at a double-digit rate in each of the last three years.

The Milwaukee-based manufacturer also is pressing for entry to India, opened its first dealership in East China last Nov. 3, launched its first dealership in Taiwan in April, and created a subsidiary office in South Africa in May.

First quarter retail sales of Harley-Davidson motorcycles in the U.S. decreased 12.8 percent compared to the same three months in 2007. In international markets, H-D retail sales increased 16.8 percent during the period.

Besides, it's not like H-D could sell a ton of MV in the United States. MV's 500 dealers worldwide moved about 5,819 motorcycles last year, only a small fraction of which were retailed from the brand's 40-some dealerships in the U.S.

MV has had a tumultuous corporate track record recently.

Relaunched in 1997 following 17 years as a shuttered brand, the MV Agusta Group entered the new millennium in serious financial difficulties and, by 2002, was trying to escape court-ordered temporary receivership proceedings.

In October 2004, MV Agusta CEO Claudio Castiglioni struck a deal with Malaysia's Proton Holdings Bhd to have the Malaysian firm underwrite a €70 million loan. The deal allowed MV Agusta to meet all of its outstanding debts with banks and suppliers and return to capital and asset liquidity before a Dec. 31 deadline set by lenders.

Proton became MV Agusta's majority shareholder and appointed a managing director. Castiglioni remained as company CEO.

"The return to better fortunes of MV Agusta is due to a series of factors that have concretely come together to bring about this extraordinary result," Castiglioni said following the Proton bailout in 2004. "I therefore wish to express particular thanks to the banking system in general, and to Banca Intesa in particular, for all their help and advice. It is thanks to them that the company is still a going concern. Nor let us not forget Proton, who have believed in the value and potentials of our brands, and with whom we will construct a leading force to be reckoned with on an international level." However, just one year later, in December 2005, Proton announced plans to sell its 57.8 percent stake in MV Agusta to Italian investment company Gevi SpA for one Euro plus MV Agusta's $126.8 million debt and $38.5 million working capital requirements. Proton leadership changed during the year, and new corporate directors said they no longer wanted to fund an operation with what appeared to be a growing debt load.

Now once again privately held, with the Castiglioni family owning 95 percent of MV Agusta shares, the Italian firm has again, according to Harley-Davidson, "significantly slowed production in 2008 due to financial difficulties."

Castiglioni can't be faulted for trying to make a go of it. In June 2007, in an effort to collect some funds, MV Agusta Group sold its Husqvarna brand to BMW. Castiglioni, at the time, said the sale of Husqvarna would serve as "a strategic step to concentrate all of (the company's) resources in the development of MV Agusta and Cagiva brands."

It appears more financial assistance was needed.

H-D's proposed purchase price of €70 million for MV includes payment of €45 million ($70 million) in existing bank debt and provides for a contingent payment to Castiglioni in 2016 if certain financial targets are met.

H-D plans to continue to operate MV Agusta Group from MV's headquarters based in Varese, Italy (incidentally very near BMW?s Husqvarna operations). The Motor Company says the first priority will be to appoint a leadership team to include a new managing director and to resume the manufacture of current models. Castiglioni will continue in a leadership role as chairman and will play a major role in future product development. Design chief Massimo Tamburini will continue his leadership of MV Agusta Group's design studio.

H-D's acquisition of MV is expected to close in several weeks, pending the satisfaction of contingencies and receipt of regulatory approvals. H-D intends to fund the transaction primarily through euro-denominated debt.

MV Agusta's 2008 model year lineup includes the Brutale 910S, Brutale 910R, F4 R 312, F4 R 312 1+1 and the "special production" F4CC "Claudio Castiglioni." For '09, MV has, so far, revealed a Brutale 1078RR and F4 RR 312 1078.

MV AGUSTA DEALERS IN THE UNITED STATES*

Euro Motorsports Scottsdale
14870 N Northsight Blvd., Suite 100
Scottsdale, AZ, 85260
Phone: (480) 609-1800
Web site: www.mvagustascottsdale.com

Renaissance Motorcycles
4411 East Speedway Blvd.
Tuscon, AZ, 85712
Phone: (520) 747-2647
Web site: www.ducati-az.com

BMW of Fresno
5615 E Westover Ave.
Fresno, CA, 93727
Phone: (559) 292-2269
Web site: www.bmwoffresno.com

GP Motorcycles
1606 G St.
San Diego, CA, 92101
Phone: (619) 233-4762
Web site: www.gpmotorcycles.com

Moto Forza
572 N Tulip St. Escondido, CA, 92025 Phone: (760) 746-6001 Web site: www.moto-forza.com

Munroe Motors
412 Valencia St.
San Francisco, CA, 94103
Phone: (415) 626-3496
Web site: www.munroemotors.com

Pro Italia Motors
3319 N Verdugo Rd.
Glendale, CA, 91208
Phone: (818) 249-5707
Web site: www.proitalia.com

Roseville Yamaha
2014 Taylor Rd.
Roseville, CA, 95678
Phone: (916) 784-2444
Web site: www.roseville-yamaha.com

Spectrum Motorsports
51 Auto Center Dr.
Irvine, CA, 92618
Phone: (949) 951-3611
Web site: www.spectrum-motorsports.com

Fay Myers Motorcycle World
9700 East Arapahoe Rd.
Greenwood Village, CO, 80112
Phone: (303) 744-6632
Web site: www.faymyers.com

Pikes Peak Motorsports
5867 N Nevada Ave.
Colorado Springs, CO, 80918
Phone: (719) 278-2300
Web site: www.pikespeakmotorsports.org

Cliff's Cycle Revolution
84 Mill Plain Rd.
Danbury, CT, 6811
Phone: (203) 798-2779
Web site: www.cliffsbmw.com

Ducati Miami
2001 NW 167st
Miami Gardens, FL, 33056
Phone: (305) 625-2453
Web site: www.ducatimiami.com

Euro Cycles of Tampa
8509 Gunn Highway
Odessa, FL, 33556
Phone: (813) 926-9937
Web site: www.ridetampa.com

Gulf Coast Motorcycles
16090 South Tamiami Trai
l Fort Myers, FL, 33908
Phone: (239) 481-8100
Web site: www.gcmotorcycles.com

House of Power
4515 Babcock Street NE
Palm Bay, FL, 32905
Phone: (321) 727-2727
Web site: www.houseofpowercycles.com

Atlanta Triumph Ducati MV Agusta
1907 B Piedmont Rd.
Atlanta , GA, 30324
Phone: (678) 904-1414
Web site: www.atlantatriumphducati.com

Beaudry Motorsports 1601 Edmunton
Post Falls , ID, 83854
Phone: (208) 777-2453
Web site: www.beaudrymotorsports.com

Hall's Husqvarna
3801 N Dirksen Pkwy.
Springfield, IL, 62707
Phone: (217) 789-0107
Web site: www.halls-cycles.com

Motor Cycle Center
518 West St Charles Rd.
Villa Park, IL, 60181
Phone: (630) 782-2010
Web site: www.teammcc.com

Letko Competition Cycles
8565 Parallel Pkwy.
Kansas City, KS, 66066
Phone: (913) 334-2410
Web site: www.letko.com

Eastern Cycles
87 Park St.
Beverly, MA, 1915
Phone: (978) 922-3707
Web site: www.easterncycleducati.com

TT Motorcycles
44335 Groesbeck Hwy.
Clinton Township, MI, 48036
Phone: (586) 468-8100
Web site: www.ttmducati.com

Heinen's
33 Central Ave.
Osseo, MN, 55369
Phone: (763) 425-2178
Web site: NA

Jack Trebour Motorcycles
1445 Route 46
Ledgewood, NJ, 7852
Phone: (973) 584-0810
Web site: www.jacktrebourmotorcycles.com

Gold Coast Motorsports
2070 Jericho Turnpike
New Hyde Park, NY, 11040
Phone: (516) 352-7474
Web site: www.goldcoast-motorsports.com

North Country Cycles
380 Oriskany Boulevard
Whitesboro, NY, 13492
Phone: (315) 768-4718
Web site: www.northcountrycycles.com

Freedom Cycles
9726 S Virginia St.
Reno , NV, 89511
Phone: (775) 358-3500
Web site: www.freedomcyclereno.com

Pat Clark Motorsports
2495 East Sahara Ave.
Las Vegas, NV, 89104
Phone: (702) 432-0650
Web site: www.patclarkmotorsports.com

BMW/DUC Motorcycles of Charlotte
12999 E Independence Blvd.
Mathews, NC, 28105
Phone: (704) 882-6106
Web site: www.bmw-ducati.com

Matison Motorsports
8841 Wadford Drive
Raleigh, NC, 27616
Phone: (919) 713-4344
Web site: www.matison.com

Crooked River
1915 Brittain Rd.
Akron, OH, 44310
Phone: (330) 630-9430
Web site: www.crookedrivermc.com

MV Agusta of Oklahoma
417 C Hudiberg Circle
Oklahoma City, OK 73108
Phone: 405-943-2691
Fax: 405-943-5518
Web site: www.bmw-ok.com

Ron Tonkin Motocorsa
2170 NW Wilson St.
Portland, OR, 97210
Phone: (503) 292-7488
Web site: www.motocorsa.com

Fast by Ferracci
2300 Maryland Rd.
Willow Grove, PA, 19090
Phone: (215) 657-1276
Web site: www.ferracci.com

North American Warhorse
1000 Dunham Drive
Dunmore, PA, 18512
Phone: (570) 346-2453
Web site: www.nawarhorse.com

Champion Honda BMW
4155 Dorchester Road
N Charleston, SC, 29405
Phone: (843) 554-4600
Web site: NA

European Cycle Sports Ltd
900 Avenue K, Suite 100
Plano, TX, 75074
Phone: (972) 881-0774
Web site: www.bmwmotorcyclesdallas.com

Houston Motorsports
9550 FM 1960 W
Houston, TX, 77070
Phone: (281) 890-2020
Web site: www.houstonyamaha.com

KC International Motor Sports
15555 Tradesman Dr.
San Antonio, TX, 78249
Phone: (210) 764-9990
Web site: www.kc-international.com

Accolade Motorsports
215 N Redwood Rd.
North Salt Lake, UT, 84054
Phone: (801) 936-4600
Web site: www.accoladems.com

Duc Pond Motorsports
663 New Loudoun St.
Winchester, VA, 22601
Phone: (540) 667-3498
Web site: www.ducpond.com

Steelhorse Motorcycles
700 Alexander Lee Parkway
Williamsburg, VA, 23185
Phone: (757) 221-6670
Web site: www.steelhorseclassics.com

Bellevue MV Agusta
14004 NE 20th
Bellevue, WA, 98007
Phone: (425) 641-5040
Web site: www.bellevuemvagusta.com

Corse Superbikes
700 E Milan Dr.
Saukville, WI, 53080
Phone: (262) 284-2725
Web site: www.corsesuperbikes.com

Stock's Harley Davidson
3206 Menasha Ave.
Manitowoc, WI, 54220
Phone: (920) 684-0237
Web site: www.stockshd.com

*As posted on www.mvagustausa.com